Professor Roy Green, Prime Minister’s Manufacturing TaskforcePublic Forum

31 August 2012Radford Auditorium, Art Gallery of South Australia

Smarter Manufacturing for a Smarter Australia

SMARTER MANUFACTURING FOR A SMARTER AUSTRALIA

Roy GreenUTS Business School

Prime Minister’s Manufacturing Taskforce

WHY MANUFACTURING

Technological change and innovation

External trade and current account

High skill, high productivity jobs

Manufacturing employment by state, May 2012 Total

manufacturing employment

(persons)

Manufacturing share of total state/territory employment

State/territory share of total

manufacturing employment

New South Wales 272.0 7.5 28.5 Victoria 311.8 10.7 32.7Queensland 170.9 7.3 17.9 South Australia 74.7 9.1 7.8Western Australia 101.8 7.9 10.7Tasmania 15.2 6.4 1.6Northern Territory 3.0 2.5 0.3Australian Capital Territory 3.9 1.9 0.4

Australia 953.3 8.3 100.0

Source: ABS Cat. No. 6291.0.55.003

Contributions to Average Incomes Growth

Source: Treasury

Australia’s labour productivity growth

is below OECD 24 average

Labour Productivity Growth: OECD vs Australia

1960s 1970s 1980s 1990sOECD 24 AverageAustralia

Source: The Conference Board Total Economy Database and Treasury.

Labour Productivity Growth: OECD vs Australia

1960s 1970s 1980s 1990s 2000sOECD 24 AverageAustralia

Source: The Conference Board Total Economy Database and Treasury.

Australia’s multifactorproductivity (MFP) growth

is negative

Multifactor Productivity (MFP) Growth

Source: The Conference Board Total Economy Database and Treasury.

German

yAus

tralia UK

USA Italy

Cana

daFra

nce

Japan

1990s

UNIT LABOUR COST COMPARISONS

COUNTRY CPI % CHANGE

Average Annual % Change 2000-2009

MANUFACTURING HOURLY LABOUR PRODUCTIVITY

Average Annual % Change 2000-2010

UNIT LABOUR COST

Average Annual % Change 2000-2010

UNITED STATES 2.50% 5.18% -1.41%

SWEDEN 3.00% 4.42% -1.01%

FINLAND 1.82% 4.54% -0.99%

GERMANY 1.60% 1.82% 0.23%

CANADA 2.00% 0.89 1.63%

AUSTRALIA 3.00% 1.93% 2.48%

Source: US Bureau of Labor Statistics: Employers Total Costs of Labor Including Direct Pay and All On Costs

OECD MANUFACTURING COMPETIVENESS INDEX: AUSTRALIA VS USA AND EURO AREA 1993-2010 (INDEX 2005=100 WHERE AN INCREASE IN THE INDEX VALUE REPRESENTS A DECLINE IN COMPETITIVENESS )

60.0

70.0

80.0

90.0

100.0

110.0

120.0

AUSTRALIA

UNITED STATES

EURO AREA

2008

INVESTMENT IN KNOWLEDGE

% of GDP2004

6.8%

6.1%

5.5%

4.7%

4.1%

NATIONAL INNOVATION SYSTEMGovernment

and Public Agencies  

Finance and

Venture Capital

Research and Education

Institutions

 

Enterprises and Workplaces

TYPES OF INTERVENTIONSupply Side Tools

Financial

Equity Support

Fiscal Tools

Public Sector Research Support

Training & Mobility Support

Industrial Innovation Grants

Services

Information Provision

Brokerage Support

Networking Measures

Demand Side Tools

Systemic Policies Procurement Regulation

UTS:BUSINESS

“Improving management practice is associated with large increases in productivity and output.”

3.32

3.19

3.19

3.18

3.15

3.02

3.01

2.99

2.98

2.90

2.79

2.77

2.68

2.67

2.66

2.64

2.6 2.8 3 3.2 3.4management scores

USSweden

JapanGermany

CanadaAustralia

FranceGreat Britain

ItalyPoland

PortugalIrelandBrazilIndia

GreeceChina

Not statistically different *

*

Global Management Competence

Source: Data collected from interviews conducted by the Australian Management Practices Project Team

3.32

3.19

3.19

3.18

3.15

3.02

3.01

2.99

2.98

2.90

2.79

2.77

2.68

2.67

2.66

2.64

2.6 2.8 3 3.2 3.4management scores

USSweden

JapanGermany

CanadaAustralia

FranceGreat Britain

ItalyPoland

PortugalIrelandBrazilIndia

GreeceChina

Not statistically different *

*

Global Management Competence

Source: Data collected from interviews conducted by the Australian Management Practices Project Team

Large, global companies

Significant plant autonomy

High levels of skill &

education

Better management is associated with:

Australian Management Performance Gaps

2

2.2

2.4

2.6

2.8

3

3.2

3.4

3.6

3.8

4

Australian score

Global best performing country score

OperationsManagement

Performance Management

PeopleManagement

OperationsMetrics

PerformanceMetrics

PeopleMetrics

Australia

Global best

Australian Management Performance Gaps

2

2.2

2.4

2.6

2.8

3

3.2

3.4

3.6

3.8

4

Australian score

Global best performing country score

OperationsManagement

Performance Management

PeopleManagement

OperationsMetrics

PerformanceMetrics

PeopleMetrics

Australia

Global best

2

2.2

2.4

2.6

2.8

3

3.2

3.4

3.6

3.8

4

Australian score

Global best performing country score

OperationsManagement

Performance Management

PeopleManagement

2

2.2

2.4

2.6

2.8

3

3.2

3.4

3.6

3.8

4

Australian score

Global best performing country score

OperationsManagement

Performance Management

PeopleManagement

‘Instilling a talent mindset’

SUCCEEDING IN A HIGH COST ECONOMY

Roos and Burton, Integrated Innovation Driven by Emerging Technologies, 2012

CapableEntrepreneurialLeadership withAmbitious Goals

Depth

Decentralisation

Knowledgeable, LoyalLow turn-over

Employees

Focus

IntegratedInnovation

Globalisation

Specific Closenessto the customer

High PerformanceHigh Quality

Product-Service-SystemOffering

Risk reducing andInnovation driving partnerships with

research and expertise centres

Panel response and questions